Investieren Sie in Kredite und verdienen Sie gute Renditen!

Price and Sentiment Analysis: Why is Bitcoin Going Down?

Bitcoin Price and Sentiment Analysis with variable Moving Average: click to open interactive Tableau dashboard with annotations
Bitcoin Price and Sentiment Analysis with variable Moving Average: click to open interactive Tableau dashboard with annotations

Bitcoin has become one of the trendy investment assets in the recent years. Whenever bitcoin prices approach historical highs, every investor should watch the currency closely. Bitcoin rallied by more than 20% in the first days of 2017, crossing the $1000 mark for the first time since November 2013.

As many experienced bitcoin traders will remember, the first $1000 peak was a case of obvious over exuberance. Bitcoin was hot, plenty of money was pouring into it. Bitcoin investors got too excited, causing a price surge. Prices then rebounded and suffered a long-term collapse shortly after.

Moving Average Convergence/Divergence Indicator

Many traders rely on a Moving Average Convergence/Divergence (MACD) indicator. The MACD is a measure of the convergence and divergence between two EMAs (usually 12 and 26 days) and is calculated by subtracting the two of them. The signal line is constructed by creating an EMA (usually 10 days) of the signal line.

The signal line crossing the MACD from above is a buy signal. The signal line crossing the MACD from below is a sell signal. Relying only on momentum-based indicators (such as the MACD) and optimization-based models, however, will most certainly fail to indicate heavy price drops, as the drop in late 2016.

Predicting Fear with Sentiment Analysis

In late 2016 a lot of people began to pour money into bitcoin again. This time because they were worried that stock markets and other assets were due for a drop. For investors, it is essential to figure out whether or not these fears are actually founded. However, such “safe assets” are prone to suffering from bubbles. People get scared, get invested into gold, or bitcoin, then realize that their fears were unfounded. As a result bitcoin prices could plummet.

So how to catch emotions such as fear in advance? Twitter is a valuable source of information and emotion. It certainly influences the stock market and can help to predict the market. Sentiment analysis can lead price movements by up to two days. Negative sentiment, however, is reflected in the market much more than positive sentiment. This is probably because most people tweet positive things about bitcoins most of the time. Even more positive news occurred after breaking the $1000 barrier.

This content is part of the session “Price and Sentiment Analysis: Why is Bitcoin Going Down?” that I deliver at the Frankfurt Bitcoin Colloquium. Have a look on my upcoming sessions!

[Update 14 Jun 2017]: Axis for Moving Average adjusted. Relative Date selector added with last 6 month as default. Screenshot updated.

Feel free to share the Bitcoin Price and Sentiment Analysis dashboard, which is also featured as Viz of the Day on Tableau Public: Erster deutscher Marktplatz für Bitcoins

Bitcoins sind derzeit auch bei uns am CERN ein brandheißes Thema. Innerhalb weniger Wochen stieg der Wert eines Bitcoins (BTC) von 20 Cent im Dezember 2010 auf Größenordnungen von bis zu 30 Dollar. Dennoch lohnt sich das Mining kaum, zumindest nicht zu den aktuellen Strompreisen.

Die Bitcoin-Börse schafft hier nun Abhilfe! Ein gutes halbes Jahr später, am 26. August 2011, hat der erste deutsche Marktplatz zum Kaufen und Verkaufen von Bitcoins den Handel aufgenommen. Auf können User auf einfache Art und Weise Bitcoins an andere User verkaufen oder von diesen kaufen.

Dafür ist es erforderlich, dass sich die User bei registrieren und, insofern sie als Verkäufer auftreten wollen, auf ihr Benutzerkonto ein Bitcoin-Guthaben übertragen. Sobald für die eigenen Bitcoins ein Käufer gefunden wurde, werden automatisch alle Informationen zur Bezahlung an den Käufer übermittelt.

Die Bezahlung der Bitcoins erfolgt direkt zwischen Käufer und Verkäufer. Erst wenn die Zahlung beim Verkäufer eingegangen ist, werden die Bitcoins abzüglich einer geringen Gebühr aus dem Guthaben des Verkäufers in das Guthaben des Käufers übertragen.